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Hi-Crush Is Misunderstood and Neglected

But we think the lowest-cost frac sand provider is attractively valued.

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We think  Hi-Crush Partners (HCLP) is misunderstood by its master limited partnership-oriented investor base and neglected by oil and gas analysts who underrate the imminent strong profits for pure-play low-cost Northern White frac sand producers.

Hi-Crush will continue to be the lowest-cost producer of Northern White frac sand in the industry, a fact that has been obscured by the U.S. shale downturn as well as the shift in mix through the downturn from Northern White to Texas-based “regional” sands. Regional sands notwithstanding, over 70% of the frac sand market will need to be supplied by Northern White sands in our midcycle forecast, and Hi-Crush stands at the bottom of this cost curve.

Preston Caldwell does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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